Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The registrant has ~~44,609,387~~45,806,406 shares of common stock, par value $0.01 per share, issued and outstanding as of ~~October 25, 2019.~~July 31, 2020.

	September 27, 2019			December 28, 2018			July 3, 2020			January 3, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	112,327		$	103,877		$	116,315		$	119,968
Accounts receivable trade, net of allowance of doubtful accounts of $75 and $550, respectively		30,789			25,946
Accounts receivable trade, net of allowance of doubtful accounts of $52 and $88, respectively								39,469			30,996
Inventories, net		16,440			16,704			17,836			17,142
Prepayments, deposits and other current assets		5,406			5,045			8,897			6,560
Total current assets		164,962			151,572			182,517			174,666
Property, plant and equipment, net		14,846			11,451			21,478			17,065
Finance lease right-of-use assets, net		2,006			—			687			1,867
Operating lease right-of-use assets, net		6,677			—			5,587			6,684
Intangible assets, net		252			243			280			296
Goodwill		1,786			1,786			1,785			1,786
Deferred income taxes		1,460			1,278			5,114			3,750
Other assets		752			1,009			591			751
Total assets	$	192,741		$	167,339		$	218,039		$	206,865
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Line of credit	$	2,340		$	3,780		$	1,325		$	1,827
Accounts payable		7,535			6,524			8,890			8,050
Obligations under finance leases		752			1,098			493			560
Obligations under operating leases		2,789			—			2,355			2,700
Allowance for sales returns		3,691			2,895			4,285			3,644
Other current liabilities		12,865			13,431			14,241			17,697
Total current liabilities		29,972			27,728			31,589			34,478
Obligations under finance leases		471			459			108			366
Obligations under operating leases		4,003			—			3,320			4,086
Deferred income taxes		1,539			1,022
Asset retirement obligations		211			206			212			211
Deferred rent		—			188
Pension liability		7,205			5,310			8,136			7,840
Total liabilities		43,401			34,913			43,365			46,981
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 60,000 shares authorized: 44,606 and 44,195 shares issued and outstanding at September 27, 2019 and December 28, 2018, respectively		446			442
Common stock, $0.01 par value; 60,000 shares authorized: 45,788 and 44,822 shares issued and outstanding at July 3, 2020 and January 3, 2020, respectively								458			448
Additional paid-in capital		299,597			289,584			320,235			304,288
Accumulated other comprehensive loss		(2,520	)		(1,320	)		(2,909	)		(3,048	)
Accumulated deficit		(148,183	)		(156,280	)		(143,110	)		(141,804	)
Total stockholders’ equity		149,340			132,426			174,674			159,884
Total liabilities and stockholders’ equity	$	192,741		$	167,339		$	218,039		$	206,865

	Three Months Ended						Nine Months Ended						Three Months Ended					Six Months Ended
	September 27, 2019			September 28, 2018			September 27, 2019			September 28, 2018			July 3, 2020			June 28, 2019		July 3, 2020			June 28, 2019
Net sales	$	39,055		$	31,770		$	111,302		$	92,768		$	35,194		$	39,664	$	70,381		$	72,247
Cost of sales		10,004			7,910			28,172			24,250			10,764			9,765		21,191			18,168
Gross profit		29,051			23,860			83,130			68,518			24,430			29,899		49,190			54,079
Selling, general and administrative expenses:
General and administrative		7,098			6,087			21,443			18,054			7,848			7,508		15,817			14,345
Marketing and selling		12,463			10,620			34,288			28,733			10,326			11,682		21,354			21,825
Research and development		6,156			5,570			17,889			16,323			7,311			6,098		14,209			11,733
Total selling, general and administrative expenses		25,717			22,277			73,620			63,110			25,485			25,288		51,380			47,903
Operating income		3,334			1,583			9,510			5,408
Operating income (loss)														(1,055	)		4,611		(2,190	)		6,176
Other income (expense), net:
Interest income (expense), net		266			(29	)		796			(65	)
Interest income, net														20			259		236			530
Gain (loss) on foreign currency transactions		(584	)		52			(821	)		(545	)		388			11		(80	)		(237	)
Royalty income		106			159			440			465			52			163		146			334
Other income, net		26			40			124			61
Total other income (expense), net		(186	)		222			539			(84	)
Income before income taxes		3,148			1,805			10,049			5,324
Provision for income taxes		760			346			2,380			1,452
Net income	$	2,388		$	1,459		$	7,669		$	3,872
Net income per share:
Other income (expense), net														(21	)		1		(20	)		98
Total other income, net														439			434		282			725
Income (loss) before income taxes														(616	)		5,045		(1,908	)		6,901
Provision (benefit) for income taxes														556			1,131		(602	)		1,620
Net income (loss)													$	(1,172	)	$	3,914	$	(1,306	)	$	5,281
Net income (loss) per share:
Basic	$	0.05		$	0.03		$	0.17		$	0.09		$	(0.03	)	$	0.09	$	(0.03	)	$	0.12
Diluted	$	0.05		$	0.03		$	0.16		$	0.09		$	(0.03	)	$	0.08	$	(0.03	)	$	0.11
Weighted average shares outstanding:
Basic		44,563			43,054			44,426			42,065			45,354			44,479		45,152			44,357
Diluted		46,857			46,025			46,848			44,618			45,354			46,733		45,152			46,842

Three Months Ended

Nine Months Ended

September 27,
2019

September 28,
2018

September 27,
2019

September 28,
2018

Net income

$
2,388

$
1,459

$
7,669

$
3,872

Other comprehensive loss:

Defined benefit plans:

Net change in plan assets

(1,037
)

(21
)

(1,677
)

(51
)
Reclassification into other income, net

26

25

80

76

Foreign currency translation gain (loss)

(22
)

(321
)

317

(114
)
Tax effect

115

105

80

38

Other comprehensive loss, net of tax

(918
)

(212
)

(1,200
)

(51
)
Comprehensive income

$
1,470

$
1,247

$
6,469

$
3,821

	Three Months Ended						Six Months Ended
	July 3, 2020			June 28, 2019			July 3, 2020			June 28, 2019
Net income (loss)	$	(1,172	)	$	3,914		$	(1,306	)	$	5,281
Other comprehensive income (loss):
Defined benefit plans:
Net change in plan assets		(28	)		(614	)		(53	)		(640	)
Reclassification into other income, net		72			28			142			54
Foreign currency translation loss		113			382			86			339
Tax effect		(40	)		(55	)		(36	)		(35	)
Other comprehensive income (loss), net of tax		117			(259	)		139			(282	)
Comprehensive income (loss)	$	(1,055	)	$	3,655		$	(1,167	)	$	4,999

	Three Months Ended															Three Months Ended
	Common Stock Shares		Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Compre- hensive Income (Loss)			Accumulated Deficit			Total			Common Stock Shares		Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Compre- hensive Income (Loss)			Accumulated Deficit			Total
Balance, at June 28, 2019		44,534	$	445	$	296,063	$	(1,602	)	$	(150,571	)	$	144,335
Balance, at April 3, 2020																	45,105	$	451	$	309,480	$	(3,026	)	$	(141,938	)	$	164,967
Net loss																	—		—		—		—			(1,172	)		(1,172	)
Other comprehensive income																	—		—		—		117			—			117
Common stock issued upon exercise of options																	681		7		7,546		—			—			7,553
Stock-based compensation																	—		—		3,209		—			—			3,209
Vested restricted stock																	2		—		—		—			—			—
Balance, at July 3, 2020																	45,788	$	458	$	320,235	$	(2,909	)	$	(143,110	)	$	174,674
Balance, at March 29, 2019																	44,447	$	444	$	292,722	$	(1,343	)	$	(154,485	)	$	137,338
Net income		—		—		—		—			2,388			2,388			—		—		—		—			3,914			3,914
Other comprehensive loss		—		—		—		(918	)		—			(918	)		—		—		—		(259	)		—			(259	)
Common stock issued upon exercise of options		64		1		718		—			—			719			52		1		486		—			—			487
Stock-based compensation		—		—		2,816		—			—			2,816			—		—		2,855		—			—			2,855
Unvested restricted stock																	11		—		—		—			—			—
Vested restricted stock		8		—		—		—			—			—			24		—		—		—			—			—
Balance, at September 27, 2019		44,606	$	446	$	299,597	$	(2,520	)	$	(148,183	)	$	149,340
Balance, at June 29, 2018		41,877	$	419	$	210,488	$	(989	)	$	(158,835	)	$	51,083
Net income		—		—		—		—			1,459			1,459
Other comprehensive loss		—		—		—		(212	)		—			(212	)
Proceeds from public stock offering		2,000		20		72,130		—			—			72,150
Common stock issued upon exercise of options		219		2		2,173		—			—			2,175
Stock-based compensation		—		—		2,209		—			—			2,209
Vested restricted stock		8		—		—		—			—			—
Balance, at September 28, 2018		44,104	$	441	$	287,000	$	(1,201	)	$	(157,376	)	$	128,864
Balance, at June 28, 2019																	44,534	$	445	$	296,063	$	(1,602	)	$	(150,571	)	$	144,335

	Nine Months Ended																Six Months Ended
	Common Stock Shares		Common Stock Par Value		Additional Paid-In Capital			Accumulated Other Compre- hensive Income (Loss)			Accumulated Deficit			Total			Common Stock Shares		Common Stock Par Value		Additional Paid-In Capital			Accumulated Other Compre- hensive Income (Loss)			Accumulated Deficit			Total
Balance, at January 3, 2020																		44,822	$	448	$	304,288		$	(3,048	)	$	(141,804	)	$	159,884
Net loss																		—		—		—			—			(1,306	)		(1,306	)
Other comprehensive income																		—		—		—			139			—			139
Common stock issued upon exercise of options																		877		9		9,548			—			—			9,557
Stock-based compensation																		—		—		6,399			—			—			6,399
Vested restricted stock																		89		1		—			—			—			1
Balance, at July 3, 2020																		45,788	$	458	$	320,235		$	(2,909	)	$	(143,110	)	$	174,674
Balance, at December 28, 2018		44,195	$	442	$	289,584		$	(1,320	)	$	(156,280	)	$	132,426			44,195	$	442	$	289,584		$	(1,320	)	$	(156,280	)	$	132,426
Net income		—		—		—			—			7,669			7,669			—		—		—			—			5,281			5,281
Adoption of ASC 842		—		—		—			—			113			113
Adoption of ASU 2018-07		—		—		(315	)		—			315			—
Impact of the adoption of lease accounting standard																		—		—		—			—			113			113
Impact of adoption of nonemployee share-based payment standard																		—		—		(315	)		—			315			—
Other comprehensive loss		—		—		—			(1,200	)		—			(1,200	)		—		—		—			(282	)		—			(282	)
Common stock issued upon exercise of options		190		2		1,827			—			—			1,829			126		1		1,109			—			—			1,110
Stock-based compensation		—		—		8,501			—			—			8,501			—		—		5,685			—			—			5,685
Unvested restricted stock		11		—		—			—			—			—			11		—		—			—			—			—
Vested restricted stock		210		2		—			—			—			2			202		2		—			—			—			2
Balance, at September 27, 2019		44,606	$	446	$	299,597		$	(2,520	)	$	(148,183	)	$	149,340
Balance, at December 29, 2017		41,383	$	414	$	204,920		$	(1,150	)	$	(161,248	)	$	42,936
Net income		—		—		—			—			3,872			3,872
Other comprehensive loss		—		—		—			(51	)		—			(51	)
Proceeds from public offering of stock		2,000		20		72,130			—			—			72,150
Common stock issued upon exercise of options		525		5		4,575			—			—			4,580
Stock-based compensation		—		—		5,375			—			—			5,375
Unvested restricted stock		11		—		—			—			—			—
Vested restricted stock		185		2		—			—			—			2
Balance, at September 28, 2018		44,104	$	441	$	287,000		$	(1,201	)	$	(157,376	)	$	128,864
Balance, at June 28, 2019																		44,534	$	445	$	296,063		$	(1,602	)	$	(150,571	)	$	144,335

	Nine Months Ended						Six Months Ended
	September 27, 2019			September 28, 2018			July 3, 2020			June 28, 2019
Cash flows from operating activities:
Net income	$	7,669		$	3,872
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							$	(1,306	)	$	5,281
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation of property, plant, and equipment		2,853			1,792			1,518			1,983
Amortization of intangibles		26			26			17			17
Deferred income taxes		526			363			(1,369	)		393
Change in net pension liability		264			233			376			203
Loss on disposal of property and equipment		14			8			3			—
Stock-based compensation expense		7,778			4,926			5,839			5,220
Provision for sales returns and bad debts		309			892			605			(32	)
Inventory provision		1,222			1,181			816			787
Changes in working capital:
Accounts receivable		(4,260	)		(3,989	)		(8,409	)		(6,533	)
Inventories		(179	)		(3,625	)		(932	)		106
Prepayments, deposits, and other current assets		(230	)		(1,021	)		(2,172	)		(1,154	)
Accounts payable		546			2,121			297			563
Other current liabilities		(536	)		3,643			(3,471	)		(2,626	)
Net cash provided by operating activities		16,002			10,422
Net cash provided by (used in) operating activities								(8,188	)		4,208
Cash flows from investing activities:
Acquisition of property and equipment		(7,169	)		(1,721	)		(4,210	)		(4,601	)
Acquisition of patents and licenses		(30	)		—			—			(30	)
Net cash used in investing activities		(7,199	)		(1,721	)		(4,210	)		(4,631	)
Cash flows from financing activities:
Proceeds from public offering of stock		—			72,150
Repayment of finance lease obligations		(998	)		(1,396	)		(346	)		(681	)
Repayment on line of credit		(1,512	)		(251	)		(508	)		(999	)
Proceeds from the exercise of stock options		1,829			4,580			9,557			1,110
Proceeds from vested restricted stock		2			2			1			2
Net cash provided by (used in) financing activities		(679	)		75,085			8,704			(568	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		204			(111	)		41			243
Increase in cash, cash equivalents and restricted cash		8,328			83,675
Decrease in cash, cash equivalents and restricted cash								(3,653	)		(748	)
Cash, cash equivalents and restricted cash, at beginning of the period		103,999			18,641			119,968			103,999
Cash, cash equivalents and restricted cash, at end of the period	$	112,327		$	102,316		$	116,315		$	103,251

The Condensed Consolidated Financial Statements of the Company present the financial position, results of operations, and cash flows of STAAR Surgical Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Commission. In accordance with those rules and regulations certain information and footnote disclosures normally included in the Comprehensive Financial Statements have been condensed or omitted pursuant to such rules and regulations. The Consolidated Balance Sheet as of ~~December 28, 2018~~January 3, 2020 was derived from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended ~~December 28, 2018.~~January 3, 2020.

The Condensed Consolidated Financial Statements for the three and ~~nine~~six months ended ~~September 27,~~July 3, 2020 and June 28, 2019, ~~and September 28, 2018,~~ in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition and results of operations. The results of operations for the three and ~~nine~~six months ended ~~September 27,~~July 3, 2020 and June 28, 2019, ~~and September 28, 2018,~~ are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

Each of the Company’s fiscal reporting periods ends on the Friday nearest to the quarter ending date and generally consists of 13 weeks. Unless the context indicates otherwise “we,” “us,” the “Company,” and “STAAR” refer to STAAR Surgical Company and its consolidated subsidiaries.

~~The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total~~There were two vendors which accounted for over 27% of the ~~same such amounts shown in the Condensed Consolidated Statements~~Company’s consolidated accounts payable as of ~~Cash Flows (in 000’s):~~

The Company had restricted cash set aside as collateral for a standby letter of credit required by the California Department of Public Health for unforeseen future regulatory costs related to the decommissioning of certain manufacturing equipment. Since the quarter ended June 28, 2019, the Company was no longer required to set aside collateral for this standby letter of credit.

~~The allowance for doubtful accounts decreased during the nine months ended September 27, 2019 due to specific past due receivables that were previously reserved and subsequently collected.~~

On December 29, 2018 (beginning of fiscal year 2019), the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” and its subsequent amendments affecting the Company: (i) ASU 2018-10, “Codification Improvements to Topic 842, Leases,” and (ii) ASU 2018-11, “Leases (Topic 842): Targeted improvements,” using the modified retrospective method. Upon adoption of ASU 2016-02, the Company recognized a cumulative adjustment of $113,000 which decreased the accumulated deficit and recognized right-of-use (“ROU”) assets and lease liabilities for operating leases, whereby the Company’s accounting finance leases remained substantially unchanged.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

July 3,~~Note 1~~ ~~— Basis of Presentation and Significant Accounting Policies (Continued)~~

The Company recognizes ROU assets and lease liabilities for leases with terms greater than twelve months in the Condensed Consolidated Balance Sheets. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the Condensed Consolidated Statement of Income.

A contract contains a lease if the contract conveys the right to control an identified asset for a period of time in exchange for consideration. An asset is either explicitly identified or implicitly identified and must be physically distinct. In addition, the Company must have both the right to obtain substantially all of the economic benefits from use of the identified asset and has the right to direct the use of the identified asset.

Certain leases may have non-lease components such as common area maintenance expense for building leases and maintenance expenses for automobile leases. In general, the Company separates common area maintenance expense component from the value of the ROU asset and lease liability when evaluating rental properties under ASU 2016-02, whereas, the Company includes the maintenance and service components in the value of the ROU asset and lease liability while evaluating automobile leases under ASU 2016-02.

When determining whether a lease is a finance lease or an operating lease, ASU 2016-02 does not specifically define criteria to determine “major part of remaining economic life of the underlying asset” and “substantially all of the fair value of the underlying asset.” For lease classification determination, the Company continues to use (i) greater to or equal to 75% to determine whether the lease term is a major part of the remaining economic life of the underlying asset and (ii) greater to or equal to 90% to determine whether the present value of the sum of lease payments is substantially all of the fair value of the underlying asset.

~~The Company uses either the rate implicit in the lease or its incremental borrowing rate as the discount rate in lease accounting.~~

When adopting ASU 2016-02, the Company did not reassess any expired or existing contracts, reassess the lease classification for any expired or existing leases and reassess initial direct costs for exiting leases. The Company also elected not to capitalize leases that have terms of twelve months or less.

The Company reviews ROU assets, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The Company measures recoverability of these assets by comparing the carrying value of such assets to the estimated undiscounted future cash flows the assets are expected to generate. When the estimated undiscounted future cash flows are less than their carrying amount, an impairment loss is recognized equal to the difference between the assets’ fair value and their carrying value.

~~As of September 27, 2019, there~~2020. There was one vendor which accounted for ~~13%~~over 11% of the Company’s consolidated accounts ~~payable. As~~payable as of ~~December 28, 2018, there~~January 3, 2020. There were no vendors ~~which~~who accounted for over 10% of the Company’s consolidated ~~accounts payable.~~purchases for the three months ended July 3, 2020. There were three vendors who accounted for over 43% of the Company’s consolidated purchases for the six months ended July 3, 2020.

During the COVID-19 pandemic, the Company believes it has used reasonable estimates and assumptions in determining valuation allowances for uncollectible trade receivables, sales returns reserves, obsolete and excess inventory reserves, deferred income taxes, and tax reserves, including valuation allowances for deferred tax assets, pension liabilities, evaluation of asset impairment, in determining the useful life of depreciable and definite-lived intangible assets, and in the variables and assumptions used to calculate and record stock-based compensation. During the quarter ended July 3, 2020, the Company has experienced some delays in customer payments but is unaware of any material impairment of customer receivables. The Company’s sales representatives throughout the world remain engaged with customers conducting online training and other educational courses which have been very well attended. This activity has given the Company insight as to the impact to customers of COVID-19 and potential impairment of receivables.

Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements Not Yet Adopted

On ~~December 29, 2018~~January 4, 2020 (beginning of fiscal year ~~2019)~~2020), the Company adopted Accounting Standards Update (“ASU”) 2016‑13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which (i) significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model; and (ii) provides for recording credit losses on available-for-sale debt securities through an allowance account. ASU ~~2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” provides an option~~2016-13 also requires certain incremental disclosures. Subsequently, the FASB issued ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2020-02 and ASU 2020-03 to reclassify stranded tax effects within Accumulated Other Comprehensive Income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cutsclarify and ~~Jobs Act is recorded.~~improve ASU 2016-13. The adoption of ASU ~~2018‑02~~2016-13 did not have a material impact on the Condensed Consolidated Financial Statements.

On ~~December 29, 2018~~January 4, 2020 (beginning of fiscal year ~~2019)~~2020), the Company adopted ASU ~~2018-07, “Compensation-Stock Compensation~~2018-13, “Fair Value Measurement (Topic ~~718)~~820): ~~Improvements~~Disclosure Framework – Changes to ~~Nonemployee Share-Based Payment Accounting,~~the Disclosure Requirements for Fair Value Measurement,” ~~aligns the accounting~~which modifies certain disclosures requirements for ~~share-based payments to nonemployees similar to employees. Upon the~~reporting fair value measurements. The adoption of ASU ~~2018-07,~~2018-13 did not have a material impact on the ~~Company recognized a cumulative adjustment of $315,000 which decreased the accumulated deficit.~~Condensed Consolidated Financial Statements.

Note 1 — Basis of Presentation and Significant Accounting Policies (Continued)

Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements Not Yet Adopted (Continued)

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which modifies certain disclosures requirements for reporting fair value measurements. This is effective for fiscal years ending after December 15, 2019. Early adoption is permitted. The Company will adopt this standard as ofOn January 4, 2020 (beginning of fiscal year 2020) ~~and is currently evaluating~~, the ~~disclosure requirements and its effect on the Condensed Consolidated Financial Statements.~~

~~In August 2018, the FASB issued~~Company adopted ASU 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20); Disclosure Framework – Changes in the Disclosure Requirement for Defined Benefit Plans,” which modifies disclosure requirements for employers that sponsor defined benefit pension or other post retirement plans. ~~This~~The adoption of ASU 2018-14 did not have a material impact on the Condensed Consolidated Financial Statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU 2019-12 removes the following exceptions: exception to the incremental approach for intra period tax allocation; exception to accounting for basis differences when there are ownership changes in foreign investments; and exception to interim period tax accounting for year to date losses that exceed anticipated losses. ASU 2019-12 also improves financial reporting for franchise taxes that are partially based on income; transactions with a government that result in a step up in the tax basis of goodwill; separate financial statements of legal entities that are not subject to tax; and enacted changes in tax laws in interim periods. ASU 2019-12 is effective for fiscal years ~~ending~~beginning after December 15, ~~2020.~~2020 and interim periods within those fiscal years. Early adoption is permitted. The Company will adopt this standard as of January 2, 2021 (beginning of fiscal year 2021) and is currently evaluating the disclosure requirements and its effect on the Condensed Consolidated Financial Statements.

Inventories, net are stated at the lower of cost and net realizable value, determined on a first-in, first-out basis and consisted of the following (in thousands):

	September 27, 2019		December 28, 2018		July 3, 2020		January 3, 2020
Raw materials and purchased parts	$	1,374	$	2,678	$	1,606	$	3,334
Work in process		724		2,195		4,997		1,870
Finished goods		15,596		13,214		12,487		12,976
Total inventories, gross		17,694		18,087		19,090		18,180
Less inventory reserves		1,254		1,383		1,254		1,038
Total inventories, net	$	16,440	$	16,704	$	17,836	$	17,142

Prepayments, deposits, and other current assets consisted of the following (in thousands):

	September 27, 2019		December 28, 2018		July 3, 2020		January 3, 2020
Prepayments and deposits	$	2,630	$	1,707	$	5,106	$	3,031
Prepaid insurance		585		1,271		726		1,488
Consumption tax receivable		549		912		661		875
Value added tax (VAT) receivable		587		565		1,313		713
Income tax receivable		523		285
BVG (Swiss Pension) prepayment						451		—
Other⁽¹⁾		532		305		640		453
Total prepayments, deposits and other current assets	$	5,406	$	5,045	$	8,897	$	6,560

	September 27, 2019		December 28, 2018		July 3, 2020		January 3, 2020
Machinery and equipment	$	17,027	$	16,905	$	20,970	$	17,173
Computer equipment and software		6,074		5,992		6,593		6,244
Furniture and fixtures		4,157		3,868		4,561		4,169
Leasehold improvements		10,118		10,045		11,100		10,151
Construction in process		5,952		2,095		8,889		8,477
Total property, plant and equipment, gross		43,328		38,905		52,113		46,214
Less accumulated depreciation		28,482		27,454		30,635		29,149
Total property, plant and equipment, net	$	14,846	$	11,451	$	21,478	$	17,065

Construction in process includes the cost of design plans and build out of facilities and the cost of equipment, as well as the direct costs incurred in the testing and validation of machinery and equipment and facilities before they are ready for productive use. Upon placement in service, costs are reclassified into the appropriate asset category and depreciation commences.

September 27, 2019

December 28, 2018

July 3, 2020

January 3, 2020

Long-lived amortized intangible assets

Gross

Carrying

Amount

Accumulated

Amortization

Net

Gross

Carrying

Amount

Accumulated

Amortization

Net

Gross

Carrying

Amount

Accumulated

Amortization

Net

Gross

Carrying

Amount

Accumulated

Amortization

Net

Patents and licenses

9,301

(9,049

)

252

9,257

(9,014

)

243

9,356

(9,076

)

280

9,353

(9,057

)

296

	September 27, 2019		December 28, 2018		July 3, 2020		January 3, 2020
Accrued salaries and wages	$	4,209	$	3,172	$	5,752	$	4,400
Accrued bonuses						—		4,184
Accrued insurance		43		1,061		372		1,346
Income taxes payable						2,579		2,710
Accrued consumption tax		771		995		750		1,164
Accrued bonuses		2,354		5,113
Income taxes payable		2,464		1,105
Accrued professional fees for clinical trials						968		567
Marketing obligations		747		361		838		633
Other⁽¹⁾		2,277		1,624		2,982		2,693
Total other current liabilities	$	12,865	$	13,431	$	14,241	$	17,697

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

Since 1998, the Company’s wholly owned Japanese subsidiary, STAAR Japan, has had an agreement with Mizuho Bank which provides for borrowings of up to 500,000,000 Yen, at an interest rate equal to the uncollateralized overnight call rate (approximately 0.06% as of ~~September 27, 2019)~~July 3, 2020) plus a 0.50% spread, and may be renewed quarterly (the current line expires on ~~November~~August 21, ~~2019)~~2020). The credit facility is not collateralized. The Company had ~~252,500,000~~142,500,000 Yen and ~~417,500,000~~197,500,000 Yen outstanding on the line of credit as of ~~September 27, 2019~~July 3, 2020 and ~~December 28, 2018,~~January 3, 2020, respectively (approximately ~~$2,340,000~~$1,325,000 and ~~$3,780,000~~$1,827,000 based on the foreign exchange rates on ~~September 27, 2019~~July 3, 2020 and ~~December 28, 2018,~~January 3, 2020, respectively), which approximates fair value due to the short-term maturity and market interest rates of the line of credit. In case of default, the interest rate will be increased to 14% per annum. There was ~~247,500,000~~357,500,000 Yen and ~~82,500,000~~302,500,000 Yen available for borrowing as of ~~September 27, 2019~~July 3, 2020 and ~~December 28, 2018,~~January 3, 2020, respectively (approximately ~~$2,293,000~~$3,325,000 and ~~$747,000~~$2,798,000 based on the foreign exchange rate on ~~September 27, 2019~~July 3, 2020 and ~~December 28, 2018,~~January 3, 2020, respectively). At maturity on ~~November~~August 21, ~~2019,~~2020, the Company expects to renew this line of credit for an additional three months, with similar terms.

In September 2013, the Company’s wholly owned Swiss subsidiary, STAAR Surgical AG, entered into a framework agreement for loans (“framework agreement”) with Credit Suisse (the “Bank”). The framework agreement provides for borrowings of up to 1,000,000 CHF (Swiss Francs) (approximately $1,100,000 and $1,000,000 at the rate of exchange on ~~September 27, 2019~~July 3, 2020 and ~~December 28, 2018)~~January 3, 2020 respectively), to be used for working capital purposes. Accrued interest and 0.25% commissions on average outstanding borrowings is payable quarterly and the interest rate will be determined by the Bank based on the then prevailing market conditions at the time of borrowing. The framework agreement is automatically renewed on an annual basis based on the same terms assuming there is no default. The framework agreement may be terminated by either party at any time in accordance with its general terms and conditions. The framework agreement is not collateralized and contains certain conditions such as providing the Bank with audited financial statements annually and notice of significant events or conditions, as defined in the framework agreement. The Bank may also declare all amounts outstanding to be immediately due and payable upon a change of control or a “material qualification” in STAAR Surgical independent auditors’ report, as defined. There were 0 borrowings outstanding as of ~~September 27, 2019~~July 3, 2020 and ~~December 28, 2018.~~January 3, 2020.

The Company is in compliance with covenants of its credit facilities and lines of credit as of ~~September 27, 2019.~~

During the nine months ended September 27, 2019, the Company converted the lease line of credit schedule 011 with Farnam Street Financial, Inc. into a finance lease liability of approximately $500,000.July 3, 2020.

The Company entered into finance leases primarily related to purchases of equipment used for manufacturing or computer-related equipment. These finance leases are two to five years in length and have fixed payment amounts for the term of the contract and have options to purchase the assets at the end of the lease term. Supplemental balance sheet information related to finance leases consisted of the following (dollars in thousands):

	September 27, 2019			July 3, 2020			January 3, 2020
Machinery and equipment	$	1,885		$	568		$	1,885
Computer equipment and software		923			860			912
Furniture and fixtures		102			—			102
Leasehold improvements		27			—			27
Finance lease right-of-use assets, gross		2,937			1,428			2,926
Less accumulated depreciation		931			741			1,059
Finance lease right-of-use assets, net	$	2,006		$	687		$	1,867

Total finance lease liability	$	1,223		$	601		$	926
Weighted-average remaining lease term (in years)		1.4			2.0			1.1
Weighted-average discount rate		6.27	%		5.40	%		6.17	%

11Supplemental cash flow information related to finance leases consisted of the following (dollars in thousands):

~~Supplemental cash flow information related to finance leases consisted of the following (dollars in thousands):~~

The Company entered into operating leases primarily related to real property (office, manufacturing and warehouse facilities), automobiles and copiers. These operating leases are two to five years in length with options to extend. The Company did not include any lease extensions in the initial valuation unless the Company was reasonably certain to extend the lease. Depending on the lease, there are those with fixed payment amounts for the entire length of the contract or payments which increase periodically as noted in the contract or increased at an inflation rate indicator. For operating leases that increase using an inflation rate indicator, the Company used the inflation rate at the time the lease was entered into for the length of the lease term. Supplemental balance sheet information related to operating leases consisted of the following (dollars in thousands):

	September 27, 2019			July 3, 2020			January 3, 2020
Machinery and equipment	$	813		$	837		$	765
Computer equipment and software		462			462			462
Real property		10,634			11,247			11,116
Operating lease right-of-use assets, gross		11,909			12,546			12,343
Less accumulated depreciation		5,232			6,959			5,659
Operating lease right-of-use assets, net	$	6,677		$	5,587		$	6,684

Total operating lease liability	$	6,792		$	5,675		$	6,786
Weighted-average remaining lease term (in years)		2.4			2.2			2.3
Weighted-average discount rate		1.79	%		1.75	%		1.82	%

Supplemental cash flow information related to operating leases was as follows (dollars in thousands):

	Three Months Ended		Nine Months Ended		Three Months Ended				Six Months Ended
	September 27, 2019		September 27, 2019		July 3, 2020		June 28, 2019		July 3, 2020		June 28, 2019
Operating lease cost	$	726	$	2,020	$	746	$	683	$	1,486	$	1,294
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows		739		2,031		763		691		1,501		1,292
Right-of-use assets obtained in exchange for new operating lease liabilities		140		2,797		249		1,193		318		2,657

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

Estimated future minimum lease payments under operating and finance leases having initial or remaining non-cancelable lease terms more than one year as of ~~September 27, 2019 and December 28, 2018 are~~July 3, 2020 is as follows (in thousands):

As of December 28, 2018
12 Months Ended

Operating Leases

Finance Leases

December 2019

$
2,606

$
1,153

December 2020

2,202

332

December 2021

980

143

December 2022

507

4

December 2023

202

—

Thereafter

12

—

Total minimum lease payments, including interest

6,509

1,632

Less amounts representing interest

—

75

Total minimum lease payments

$
6,509

$
1,557

As of July 3, 2020 12 Months Ended	Operating Leases		Finance Leases
June 2021	$	2,473	$	510
June 2022		1,394		84
June 2023		1,216		14
June 2024		665		11
June 2025		171		—
Thereafter		—		—
Total minimum lease payments, including interest	$	5,919	$	619
Less amounts representing interest		244		18
Total minimum lease payments	$	5,675	$	601

The Company recorded an income tax provision (benefit) as follows (in thousands):

The Company recorded income ~~tax provision is~~taxes of $556,000 and $1,131,000 for the three months ended July 3, 2020 and June 28, 2019, respectively, primarily due to pre-tax income generated in certain foreign jurisdictions. Also included in the three months ended June 28, 2019 were withholding taxes on foreign operations. The Company recorded an income tax benefit of $602,000 for the six months ended July 3, 2020 due to the income tax benefit from the release of its U.S. valuation allowance, offset by income tax expense from profits generated from its foreign operations. The Company recorded income taxes of $1,620,000 for the six months ended June 28, 2019, primarily due to pre-tax income generated in certain foreign jurisdictions and withholding taxes on foreign operations. The Company’s quarterly provision for income taxes is determined by estimating an annual effective tax rate. This estimate may fluctuate throughout the year as new information becomes available affecting its underlying assumptions. In the fourth quarter of fiscal year 2019, the Company reversed all previously recorded withholding taxes recorded for 2019, at which time the Company formed STAAR Surgical UK Limited as a holding company for its foreign operations. Based on the current tax treaties between the U.S., United Kingdom and Switzerland, the Company will no longer accrue for Switzerland withholding taxes on foreign earnings after fiscal 2018 (see also Note 10 in its fiscal 2019 Form 10-K for more information). There are no0 unrecognized tax benefits related to uncertain tax positions taken by the Company.

All earnings from the Company’s subsidiaries are not considered to be permanently reinvested. ~~Accordingly, the Company provides withholding and U.S. taxes on all unremitted foreign earnings.~~

The 2017 Tax Act subjects a U.S. shareholder to tax on Global Intangible Low Tax Income (“GILTI”) earned by certain foreign subsidiaries. In general, GILTI is the excess of a U.S. shareholder’s total net foreign income over a deemed return on tangible assets. The provision further allows a deduction of 50 percent of GILTI, however this deduction is limited toby the Company’s U.S. taxable income. The Company has elected to account for GILTI as a current period expense when incurred.

For the ~~nine~~three and six months ended ~~September 27, 2019,~~July 3, 2020, the Company included GILTI of ~~$12,084,000~~$4,137,000 and $5,400,000, respectively, and for the three and six months ended June 28, 2019, included GILTI of $5,635,000 and $7,699,000, respectively, in U.S. gross income, which was fully offset ~~with~~by net operating loss carryforwards. The Company was not able to utilize the deduction of 50 percent of GILTI, as this deduction is limited toby the Company’s pre-GILTI U.S. taxable income.

The ultimate realization of deferred tax assets is dependent upon future generation of income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the projected future income and tax planning strategies in making this assessment. As of ~~September 27~~,fiscal year end 2019, the Company ~~established~~had three years of accumulated profits for federal income tax purposes as a ~~full~~result of GILTI. However, the three-year income position is not solely determinative and, accordingly, management considers all other available positive and negative evidence in its analysis. This includes existing profits in foreign jurisdiction as well as projected future profits. As further described in Notes 1 and 10 of the Company’s fiscal 2019 Form 10-K, under the “incremental cash tax savings approach,” the Company recorded a valuation allowance release of $3,003,000 and $373,000 against the federal and certain states deferred tax assets, respectively. During the six months ended July 3, 2020, the Company revised its global forecasts as a result of COVID-19, and released an additional $1,369,000 of valuation allowance. As of July 3, 2020, the Company released approximately $4,745,000 of valuation allowance on its deferred tax assets in the U.S. ~~for all periods presented due to~~jurisdiction utilizing the ~~significant uncertainty~~incremental cash tax savings approach.

Under the incremental cash tax savings approach, the U.S. valuation allowances of ~~realizing future tax benefits from its~~$36,530,000, will remain as the usage of the remaining net operating ~~loss carryforwards~~losses and ~~other~~ deferred tax assets ~~with~~ will not result in cash tax savings and therefore provide no additional benefit. As of July 3, 2020, the ~~exception~~Company had net deferred tax assets in the U.S. of $4,881,000, which consisted of the federal and state valuation allowance release of $4,439,000 and $306,000, respectively, and the refundable alternative minimum tax credit of ~~$273,000.~~ ~~Management will continue~~$136,000.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law. The Company reviewed the provisions of the CARES Act, but does not expect it to monitor and evaluate all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, impact of GILTI in the U.S., tax-planning strategies, and results of recent operations.

In projecting future taxable income, the Company begins with historical results and incorporates assumptions including overall current and projected business and industry conditions, the amount of future federal, state, and foreign pretax operating income, the reversal of temporary differences and the feasible and prudent tax-planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company uses to manage the underlying businesses. In evaluating the objective evidence, the Company considers, among other financial information, three years of cumulative operating results. Valuation allowances, or reductions to deferred tax assets, are recognized if, based on the weight of all the available evidence, it is more likely than not that some portion or all the deferred tax asset may not be realized. As the Company experiences continued growth and profits the need for a valuation allowance will be evaluated each reporting period by Management to determine whether it is more likely than not that the Company’s deferred tax assets will be realizable in a later period. Any such changes in the assessment of a full or partial valuation allowance could have a material impact ~~on earnings.~~to its tax provision (also see note 15).

On July 20, the U.S. Treasury issued final regulations for addressing the treatment of foreign income that is subject to a high rate of foreign tax (the GILTI high-tax exclusion). The final regulations allow companies to exclude certain high-taxed income from their GILTI calculation. The GILTI high-tax exclusion applies if the effective foreign tax rate is 90% or more of the rate that would apply if the income were subject to the maximum US rate of tax specified in section 11 (currently 18.9%, based on a maximum rate of 21%). The final regulations also provide that the GILTI high-tax exclusion is an annual election made each year and is retroactive to years beginning after December 31, 2017. As the regulations were finalized on July 20, 2020, after the current reporting period, the impact if any on the financial statements will be reported in the third quarter. Management is currently evaluating the effect if any this election would have on their financial statements.

The Company has defined benefit plans covering employees of its Switzerland and Japan operations. The following table summarizes the components of net periodic pension cost recorded for the Company’s defined benefit pension plans (in thousands):

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 27, 2019			September 28, 2018			September 27, 2019			September 28, 2018			July 3, 2020			June 28, 2019			July 3, 2020			June 28, 2019
Service cost⁽¹⁾	$	240		$	137		$	720		$	414		$	320		$	248		$	639		$	480
Interest cost⁽²⁾		20			15			60			44			11			20			22			40
Expected return on plan assets⁽²⁾		(36	)		(28	)		(103	)		(82	)		(46	)		(34	)		(89	)		(67	)
Net amortization of transitional obligation^(2),(3)		—			3			—			8
Prior service credit^(2),(3)		(6	)		(6	)		(17	)		(17	)		(8	)		(5	)		(17	)		(11	)
Actuarial loss recognized in current period^(2),(3)		32			28			97			85			80			33			159			65
Net periodic pension cost	$	250		$	149		$	757		$	452		$	357		$	262		$	714		$	507

The Company currently is not required to and does not make contributions to its Japan pension plan. The Company’s contributions to its Swiss pension plan are as follows (in thousands):

The cost that has been charged against income for stock-based compensation is set forth below (in thousands):

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 27, 2019		September 28, 2018		September 27, 2019		September 28, 2018		July 3, 2020		June 28, 2019		July 3, 2020		June 28, 2019
Employee stock options	$	2,178	$	1,197	$	5,770	$	2,713	$	2,505	$	2,162	$	4,737	$	3,592
Restricted stock		77		82		236		192		76		77		154		159
Restricted stock units		246		501		1,661		1,593		274		311		823		1,415
Nonemployee stock options		57		247		111		428		63		29		125		54
Total stock-based compensation expense	$	2,558	$	2,027	$	7,778	$	4,926	$	2,918	$	2,579	$	5,839	$	5,220

The Company recorded stock-based compensation costs in the following categories (in thousands):

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 27, 2019		September 28, 2018		September 27, 2019		September 28, 2018		July 3, 2020		June 28, 2019		July 3, 2020		June 28, 2019
Cost of sales	$	7	$	4	$	43	$	11	$	30	$	22	$	52	$	36
General and administrative		1,082		701		2,878		1,875		1,209		1,018		2,294		1,796
Marketing and selling		692		471		2,553		1,297		812		690		1,867		1,861
Research and development		777		851		2,304		1,743		867		849		1,626		1,527
Total stock-based compensation expense, net		2,558		2,027		7,778		4,926		2,918		2,579		5,839		5,220
Amounts capitalized as part of inventory		258		182		723		449		291		276		560		465
Total stock-based compensation expense, gross	$	2,816	$	2,209	$	8,501	$	5,375	$	3,209	$	2,855	$	6,399	$	5,685

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

The Amended and Restated Omnibus Equity Incentive Plan (“the Plan”) provides for various forms of stock-based incentives. To date, of the available forms of awards under the Plan, the Company has granted only stock options, restricted stock, unrestricted share grants, and restricted stock units (“RSUs”). Options under the Plan are granted at fair market value on the date of grant, become exercisable generally over a three-year period, or as determined by the Board of Directors, and expire over periods not exceeding 10 years from the date of grant. Certain option and share awards provide for accelerated vesting if there is a change in control and pre-established financial metrics are met (as defined in the Plan). Grants of restricted stock outstanding under the Plan generally vest over periods of one to three years. Grants of RSUs outstanding under the Plan generally vest based on service, performance, or a combination of both. As of ~~September 27, 2019,~~July 3, 2020, there were ~~1,629,976~~842,975 shares available for grant under the Plan

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model applying the weighted-average assumptions noted in the following table. Expected volatilities are based on historical volatility of the Company’s stock. The expected term of options granted is derived from the historical exercises and post-vesting cancellations and represents the period of time that options granted are expected to be outstanding. The Company has calculated an 8%6% estimated forfeiture rate based on historical forfeiture experience. The risk-free rate is based on the U.S. Treasury yield curve corresponding to the expected term at the time of the grant.

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 27, 2019			September 28, 2018			September 27, 2019			September 28, 2018			July 3, 2020			June 28, 2019			July 3, 2020			June 28, 2019
Expected dividend yield		0	%		0	%		0	%		0	%		0	%		0	%		0	%		0	%
Expected volatility		53	%		53	%		53	%		53	%		53	%		53	%		53	%		53	%
Risk-free interest rate		1.55	%		2.84	%		2.40	%		2.71	%		0.31	%		2.05	%		0.53	%		2.41	%
Expected term (in years)		5.67			5.72			5.67			5.72			5.72			5.67			5.72			5.67

~~A summary of stock option activity under the Plan for the nine months ended September 27, 2019 is presented below:~~

A summary of stock option activity under the Plan for the six months ended July 3, 2020 is presented below:

A summary of restricted stock and RSU activity under the Plan for the ~~nine~~six months ended ~~September 27, 2019~~July 3, 2020 is presented below:

	Restricted Stock (in 000’s)			Restricted Stock Units (in 000’s)			Restricted Stock (in 000’s)			Restricted Stock Units (in 000’s)
Unvested at December 28, 2018		11			322
Unvested at January 3, 2020								11			104
Granted		11			19			—			97
Vested		(11	)		(210	)		(11	)		(89	)
Forfeited or expired		—			(6	)		—			(1	)
Unvested at September 27, 2019		11			125
Unvested at July 3, 2020								—			111

From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of business. These legal proceedings and other matters may relate to, among other things, contractual rights and obligations, employment matters, or claims of product liability. STAAR maintains insurance coverage for various matters, including product liability and certain securities claims. While the Company does not believe that any of the claims known is likely to have a material adverse effect on the Company’s financial condition or results of operations, new claims or unexpected results of existing claims could lead to significant financial harm.

The Company’s Chief Executive Officer entered into an employment agreement with the Company, effective March 1, 2015. She and certain officers have as provisions of their agreements certain rights, including continuance of cash compensation and benefits, upon a “change in control,” which may include an acquisition of substantially all its assets, or termination “without cause or for good reason” as defined in the employment agreements.

The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands except per share amounts):

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 27, 2019			September 28, 2018			September 27, 2019			September 28, 2018			July 3, 2020			June 28, 2019			July 3, 2020			June 28, 2019
Numerator:
Net income	$	2,388		$	1,459		$	7,669		$	3,872
Net income (loss)													$	(1,172	)	$	3,914		$	(1,306	)	$	5,281
Denominator:
Weighted average common shares:
Common shares outstanding		44,573			43,065			44,436			42,076			45,354			44,489			45,152			44,368
Less: Unvested restricted stock		(10	)		(11	)		(10	)		(11	)		—			(10	)		—			(11	)
Denominator for basic calculation		44,563			43,054			44,426			42,065			45,354			44,479			45,152			44,357
Weighted average effects of potentially diluted common stock:
Stock options		2,194			2,686			2,260			2,245			—			2,149			—			2,292
Unvested restricted stock		2			4			6			12			—			97			—			185
Restricted stock units		98			281			156			296			—			8			—			8
Denominator for diluted calculation		46,857			46,025			46,848			44,618			45,354			46,733			45,152			46,842
Net income per share:
Net income (loss) per share:
Basic	$	0.05		$	0.03		$	0.17		$	0.09		$	(0.03	)	$	0.09		$	(0.03	)	$	0.12
Diluted	$	0.05		$	0.03		$	0.16		$	0.09		$	(0.03	)	$	0.08		$	(0.03	)	$	0.11

Because the Company had a net loss for the three and six months ended July 3, 2020, the number of diluted shares is equal to the number of basic shares. The following table sets forth (in thousands) the weighted average number of options to purchase shares of common stock, restricted stock, and restricted stock units with either exercise prices or unrecognized compensation cost per share greater than the average market price per share of the Company’s common stock, which were not included in the calculation of diluted per share amounts because the effects would be anti-dilutive.

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 27, 2019		September 28, 2018		September 27, 2019		September 28, 2018		July 3, 2020		June 28, 2019		July 3, 2020		June 28, 2019
Stock options		1,836		389		1,446		278		3,082		1,991		3,502		1,256
Restricted stock and restricted stock units		—		—		—		1		59		1		72		—
Total		1,836		389		1,446		279		3,141		1,992		3,574		1,256

In the following tables, sales are disaggregated by category, sales by geographic market and sales by product data. The following breaks down sales into the following categories (in thousands):

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 27, 2019		September 28, 2018		September 27, 2019		September 28, 2018		July 3, 2020		June 28, 2019		July 3, 2020		June 28, 2019
Non-consignment sales	$	34,696	$	27,503	$	98,518	$	79,345	$	23,446	$	35,556	$	53,846	$	63,822
Consignment sales		4,359		4,267		12,784		13,423		11,748		4,108		16,535		8,425
Total net sales	$	39,055	$	31,770	$	111,302	$	92,768	$	35,194	$	39,664	$	70,381	$	72,247

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

~~Note 14~~ ~~— Disaggregation of Sales, Geographic Sales and Product Sales (Continued)~~

The Company markets and sells its products in over 75 countries and conducts its manufacturing in the United States. Other than China and Japan, the Company does not conduct business in any country in which its sales exceed 10% of worldwide consolidated net sales. Sales are attributed to countries based on location of customers. The composition of the Company’s net sales to unaffiliated customers ~~is set forth below~~was as follows (in thousands):

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 27, 2019		September 28, 2018		September 27, 2019		September 28, 2018		July 3, 2020		June 28, 2019		July 3, 2020		June 28, 2019
Domestic									$	882	$	2,114	$	2,621	$	4,066
Foreign:
China	$	18,361	$	13,349	$	49,526	$	35,224		18,603		19,394		30,318		31,165
Japan		7,345		6,006		19,139		17,781		7,463		6,275		15,765		11,794
Other⁽¹⁾		13,349		12,415		42,637		39,763		8,246		11,881		21,677		25,222
Total foreign sales										34,312		37,550		67,760		68,181
Total net sales	$	39,055	$	31,770	$	111,302	$	92,768	$	35,194	$	39,664	$	70,381	$	72,247

100% of the Company’s sales are generated from the ophthalmic surgical product segment and the chief operating decision maker makes operating decisions and allocates resources based upon the consolidated operating results, and therefore the Company operates as 1 operating segment for financial reporting purposes. The Company’s principal products are implantable Collamer lenses (“ICLs”) used in refractive surgery and intraocular lenses (“IOLs”) used in cataract surgery. The composition of the Company’s net sales by product line iswas as follows (in thousands):

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 27, 2019		September 28, 2018		September 27, 2019		September 28, 2018		July 3, 2020		June 28, 2019		July 3, 2020		June 28, 2019
ICLs	$	33,815	$	26,418	$	96,033	$	74,868	$	30,728	$	34,432	$	60,068	$	62,218
Other product sales
IOLs		4,093		3,824		11,984		12,068		2,561		3,874		6,555		7,891
Other surgical products		1,147		1,528		3,285		5,832		1,905		1,358		3,758		2,138
Total other product sales		5,240		5,352		15,269		17,900		4,466		5,232		10,313		10,029
Total net sales	$	39,055	$	31,770	$	111,302	$	92,768	$	35,194	$	39,664	$	70,381	$	72,247

One customer, the Company’s distributor in China, accounted for ~~47%~~53% and ~~44%~~43% of net sales for the three and ~~nine~~six months ended ~~September 27, 2019,~~July 3, 2020, respectively, and the same customer, accounted for ~~42%~~49% and ~~38%~~43% of net sales for the three and ~~nine~~six months ended ~~September~~June 28, ~~2018,~~2019, respectively. As of ~~September 27, 2019~~July 3, 2020 and ~~December 28, 2018,~~January 3, 2020, respectively, one customer, the Company’s distributor in China, accounted for ~~40%~~57% and ~~37%~~43% of consolidated trade receivables.

~~Computer equipment~~In December 2019, COVID-19 surfaced and ~~software was reclassified into~~in March 2020, the World Health Organization declared a ~~separate line item~~pandemic related to the rapid spread of COVID-19 around the world. The impact of the COVID-19 outbreak on the businesses and the economy in the U.S. and the rest of the world is, and is expected to continue to be, uncertain and may be significant. Accordingly, the Company cannot predict the extent to which its financial condition and results of operation will be affected. On March 17, 2020, the Company suspended most of its production and non-essential business locations where employees can work from ~~furniture~~home. A very limited number of manufacturing personnel remained at work for critical late staged processes, until the end of March 2020. Manufacturing resumed on April 27, 2020. The Company’s revenues have been adversely impacted, as customers in China were not able to carry out procedures during the month of February and ~~fixtures~~the Company experienced a substantial slowdown in ~~Note 4~~sales beginning March 20, 2020 in global geographies characterized as “hot spots” for the ~~fiscal year ended 2018~~COVID 19 virus, including parts of Europe and North America. In certain of these markets, sales have paused as elective surgeries are discouraged to ~~conform with~~support COVID-19 related needs. The Company expects decreases in sales in certain geographies to continue through the ~~2019 presentation.~~remainder of 2020 as different geographies resume business activities on differing timelines.

The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property. The Company did not apply for or require financing available under the CARES Act and does not expect to do so given the strength of our balance sheet. The Company will continue to monitor the impact that the CARES Act may have on its business, financial condition, results of operations, or liquidity.

The matters addressed in this Item 2 that are not historical information constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers can recognize forward-looking statements by the use of words like “anticipate,” “estimate,” “expect,” “intend,” “plan,” “believe,” “will,” “should,” “forecast” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements about any of the following: any projections of or guidance as to earnings, revenue, sales, profit margins, expense rate, cash, effective tax rate, capital expense or any other financial items; the expected impact of the COVID-19 pandemic and related public health measures (including but not limited to their impact on sales, operations or clinical trials globally),the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; statements regarding new, existing, or improved products, including but not limited to, expectations for success of new, existing, and improved products in the U.S. or international markets or government approval of a new or improved products (including the EVO family of lenses in the U.S. and the EDOF ICL for presbyopia internationally); commercialization of new or improved products; future economic conditions or size of market opportunities; expected costs of operations; statements of belief, including as to achieving ~~2019~~2020 business plans; expected regulatory activities and approvals, product launches, and any statements of assumptions underlying any of the foregoing.

Although we believe that the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risks and we can give no assurance that our expectations will prove to be correct. Actual results could differ from those described in this report because of numerous factors, many of which are beyond our control. These factors include, without limitation, risks and uncertainties related to the COVID-19 pandemic and related public health measures,and those described in in our Annual Report on Form 10-K in “Item 1A. Risk Factors” filed on February ~~21, 2019.~~26, 2020, as well as the updated risk factor disclosed herein. We undertake no obligation to update these forward-looking statements after the date of this report to reflect future events or circumstances or to reflect actual outcomes.

The following discussion should be read in conjunction with the audited consolidated financial statements of STAAR, including the related notes, provided in this report.

STAAR Surgical Company designs, develops, manufactures, and sells implantable lenses for the eye and companion delivery systems used to deliver the lenses into the eye. We are the world’s leading manufacturer of intraocular lenses for patients seeking refractive vision correction, and we also make lenses for use in surgery to treat cataracts. All the lenses we make are foldable, which allows the surgeon to insert them into the eye through a small incision during minimally invasive surgery. Refractive surgery is performed to treat the type of visual disorders that have traditionally been corrected using eyeglasses or contact lenses. We refer to our lenses used in refractive surgery as “implantable Collamer® lenses” or “ICLs.” The field of refractive surgery includes both lens-based procedures, using products like our ICL family of products, and laser-based procedures like LASIK. Successful refractive surgery can correct common vision disorders such as myopia, hyperopia, and astigmatism. Cataract surgery is a common outpatient procedure where the eye’s natural lens that has become cloudy with age is removed and replaced with an artificial lens called an intraocular lens (IOL) to restore the patient’s vision. STAAR employs a commercialization strategy that strives for sustainable profitable growth. Our goal is to position our refractive lenses throughout the world as primary and premium solutions for patients seeking visual freedom from wearing eyeglasses or contact lenses while achieving excellent visual acuity through refractive vision correction. We position our IOL lenses used in surgery that treats cataracts based on quality and value.

~~We achieved record sales for~~While refractive procedures were down significantly or came to a halt in April and May in much of North America, Europe, Latin America, India and the Middle East, continuing recovery and growth were recorded in Japan, Korea and China. The positive trending continued in July with China experiencing stronger than anticipated demand as the peak season began in earnest. While COVID-19 hotspots and government public health mandates may reoccur moving forward, we anticipate less business interruption and continued increased interest in our ~~third quarter and all-time record cash generation~~EVO ICL lens-based refractive solutions in the third ~~quarter.~~and fourth quarter of 2020. We also continue to believe that we will achieve a 20% share of the results through the first three quarters of 2019 put us on track to achieve the growth targets of 20% annual top line revenue growth, 30% ICL unit growth, positive cash flow, and higher GAAP net income than 2018, as we disclosed earlier this year for fiscal 2019. Subsequent torefractive procedure market in China by the end of the ~~quarter we received a letter from FDA dated October 25, 2019 approving~~year. Assuming significant COVID-19 hotspots and government public health mandates do not reoccur and global economic improvement progresses, our ~~supplement seeking approval~~outlook for the third quarter of 2020 currently anticipates a sequential revenue increase of over 20% from our second quarter of 2020 results which would then result in year-over-year double digit growth. Also, we currently expect fourth quarter of 2020 revenue will be similar to third quarter of 2020.

We resumed production at our California manufacturing facilities on April 27, 2020 and anticipate that we will be able to meet the demand for both our Spheric and Toric EVO lenses through the remainder of 2020. We are moving forward with our plans to restart manufacturing in our Nidau, Switzerland facility in 2021. With respect to our U.S. clinical trial for our EVO family of myopia lenses, assuming no material change in the current operating environment we anticipate that we will complete enrollment in the trial by the end of September. Considering the subsequent six-month patient follow-up and time to prepare our data submission to the FDA, we believe we are on track for potential marketing approval and commercialization of EVO in the U.S. ~~The letter included a few additional study design recommendations which we are working to include~~ in the ~~study protocol.~~second half of 2021.

As previously disclosed, we received on July 2, 2020, CE Mark approval for our extended depth of focus or EDOF presbyopia lens, EVO Viva, that is designed to correct near, intermediate and distance vision. We ~~are responding to FDA within~~will commence a ~~week or so.~~phased-rollout beginning in Spain, Belgium and Germany. We ~~continue to qualify study sites~~anticipate the first implants will occur in September following physician training and ~~expect our timelines will not be impacted as we work to close out the study design including FDA’s recommendations.~~certification.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses and analyzes data in our unaudited Condensed Consolidated Financial Statements provided in this report, which we have prepared in accordance with U.S. generally accepted accounting principles. Preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses,

and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Audit Committee of our Board of Directors. Actual conditions may differ from our assumptions and actual results may differ from our estimates.

An accounting policy is deemed critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably likely to occur could materially impact the financial statements. On December 29, 2018 (beginning of fiscal year 2019), the Company adopted Accounting Standards Update 2016-02, “Leases (Topic 842)” and its subsequent amendments, the impact of this new accounting standard are discussed in Notes 1 and 8 of the Condensed Consolidated Financial Statements. Other than the adoption of Topic 842, managementManagement believes that there have been no significant changes during the ~~nine~~six months ended ~~September 27~~July 3, 2020 ~~, 2019~~ to the items that we disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended ~~December 28, 2018.~~January 3, 2020.

The following table shows the percentage of our total sales represented by certain items reflected in our Condensed Consolidated Statements of ~~Income~~Operations for the periods indicated.

	Percentage of Net Sales for Three Months						Percentage of Net Sales for Six Months						Percentage of Net Sales for Three Months						Percentage of Net Sales for Six Months
	September 27, 2019			September 28, 2018			September 27, 2019			September 28, 2018			July 3, 2020			June 28, 2019			July 3, 2020			June 28, 2019
Net sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		25.6	%		24.9	%		25.3	%		26.1	%		30.6	%		24.6	%		30.1	%		25.1	%
Gross profit		74.4	%		75.1	%		74.7	%		73.9	%		69.4	%		75.4	%		69.9	%		74.9	%
General and administrative		18.2	%		19.2	%		19.3	%		19.5	%		22.3	%		18.9	%		22.5	%		19.9	%
Marketing and selling		31.9	%		33.4	%		30.8	%		31.0	%		29.3	%		29.5	%		30.3	%		30.2	%
Research and development		15.8	%		17.5	%		16.1	%		17.6	%		20.8	%		15.4	%		20.2	%		16.3	%
Total selling, general and administrative		65.9	%		70.1	%		66.2	%		68.1	%		72.4	%		63.8	%		73.0	%		66.4	%
Operating income		8.5	%		5.0	%		8.5	%		5.8	%
Operating income (loss)														(3.0	)%		11.6	%		(3.1	)%		8.5	%
Total other income (expense), net		(0.5	)%		0.7	%		0.5	%		(0.1	)%		1.2	%		1.1	%		0.4	%		1.0	%
Income before income taxes		8.0	%		5.7	%		9.0	%		5.7	%
Provision for income taxes		1.9	%		1.1	%		2.1	%		1.6	%
Net income		6.1	%		4.6	%		6.9	%		4.1	%
Income (loss) before income taxes														(1.8	)%		12.7	%		(2.7	)%		9.5	%
Provision (benefit) for income taxes														1.5	%		2.9	%		(0.8	)%		2.2	%
Net income (loss)														(3.3	)%		9.8	%		(1.9	)%		7.3	%

	Three Months Ended				Percentage Change			Nine Months Ended				Percentage Change			Three Months Ended				Percentage Change			Six Months Ended				Percentage Change
	September 27, 2019		September 28, 2018		2019 vs. 2018			September 27, 2019		September 28, 2018		2019 vs. 2018			July 3, 2020		June 28, 2019		2020 vs. 2019			July 3, 2020		June 28, 2019		2020 vs. 2019
ICLs	$	33,815	$	26,418		28.0	%	$	96,033	$	74,868		28.3	%	$	30,728	$	34,432		(10.8	)%	$	60,068	$	62,218		(3.5	)%
Other product sales
IOLs		4,093		3,824		7.0	%		11,984		12,068		(0.7	)%		2,561		3,874		(33.9	)%		6,555		7,891		(16.9	)%
Other surgical products		1,147		1,528		(24.9	)%		3,285		5,832		(43.7	)%		1,905		1,358		40.3	%		3,758		2,138		75.8	%
Total other product sales		5,240		5,352		(2.1	)%		15,269		17,900		(14.7	)%		4,466		5,232		(14.6	)%		10,313		10,029		2.8	%
Net sales	$	39,055	$	31,770		22.9	%	$	111,302	$	92,768		20.0	%	$	35,194	$	39,664		(11.3	)%	$	70,381	$	72,247		(2.6	)%

Net sales for the three months ended ~~September 27, 2019~~July 3, 2020 were ~~$39.1~~$35.2 million, ~~an increase~~a decrease of ~~23%~~11% from ~~$31.8~~$39.7 million reported during the same period of ~~2018.~~2019. The ~~increase~~decrease in net sales was due to ~~an increase~~decreases in ICL sales of ~~$7.4~~$3.7 million and other product sales of $0.8 million.

Net sales for the ~~nine~~six months ended ~~September 27, 2019~~July 3, 2020 were ~~$111.3~~$70.4 million, ~~an increase~~a decrease of ~~20%~~3% from ~~$92.8~~$72.2 million reported during the same period of ~~2018.~~2019. The ~~increase~~decrease in net sales was due to ~~an increase~~a decrease in ICL sales of ~~$21.2~~$2.2 million, partially offset by ~~a decrease~~an increase in other product sales of ~~$2.6~~$0.3 million. ~~Foreign currency, primarily the euro, negatively impacted net sales by approximately $1.3 million for the nine months ended September 27, 2019.~~

Total ICL sales for the three months ended ~~September 27, 2019~~July 3, 2020 were ~~$33.8~~$30.7 million, a ~~28% increase~~decrease of 11% from ~~$26.4~~$34.4 million reported for the same period of ~~2018,~~2019, with unit ~~growth up 35%. The sales increase was driven by the APAC region, which grew 37% with unit growth~~decrease of ~~43%, primarily due to sales growth in China up 38%, Japan up 63%, Korea up 33% and other APAC distributors up 19%, partially offset by decreased sales in India of 14%~~3%. The Europe, Middle East, Africa and Latin America region ~~grew 5%~~sales decreased 30% with unit decrease of 31%. The North America region sales decreased 55%, with unit decrease of 56%. The decrease in both these regions were impacted by the COVID-19 pandemic when markets started to reopen in mid-May/early June. The APAC region sales decreased by 2%, with unit growth up ~~8%,~~5% due to ~~sales~~unit growth in ~~Spain~~Japan up ~~12%~~39%, ~~Distributor Operations~~Korea up 7%16% and ~~Germany~~China up ~~5%, partially offset by decreased sales in Latin America of 9%~~6%.The North America region grew 19%, with unit growth of 2%, primarily due to sales growth of 24% in the U.S., as a result of sales of Toric ICL in 2019 (none in 2018), partially offset by decreased sales in Canada. ICL sales represented ~~86.6%~~87.3% and ~~83.2%~~86.8% of our total sales for the three months ended ~~September 27,~~July 3, 2020 and June 28, 2019, ~~and September 28, 2018,~~ respectively.

Total ICL sales for the ~~nine~~six months ended ~~September 27, 2019~~July 3, 2020 were ~~$96.0~~$60.1 million, a ~~28% increase~~4% decrease from ~~$74.9~~$62.2 million reported for the same period of ~~2018,~~2019, with unit growth up 36%. The sales increase was driven by the APAC region, which grew 41% with unit growth of 47%, primarily due to sales growth in Japan up 58%, China up 41%, Korea up 41%, other APAC distributors up 23% and India up 9%2%. The Europe, Middle East, Africa and Latin America region ~~increased 1% with unit growth up 6%, due primarily to~~ sales ~~growth in UK up 30%, Germany up 6%~~ and ~~Spain up 3%, partially offset by~~units decreased ~~sales in the Middle East and Latin America of 8%~~17%. The North America region ~~grew 17%~~sales and units decreased 32%. The decrease in both these regions were impacted by the COVID-19 pandemic when markets started to reopen in mid-May/early June. The APAC region sales increased by 3%, with unit growth ~~of 2%, primarily~~up 8% due to ~~sales~~unit growth ~~of 25%~~ in ~~the U.S.~~Japan up 58%, ~~as a result of sales of Toric ICL in 2019 (none in 2018), partially offset by decreased sales in Canada.~~Korea up 15% and China up 7%. ICL sales represented ~~86.3%~~85.3% and ~~80.7%~~86.1% of our total sales for the ~~nine~~six months ended ~~September 27,~~July 3, 2020 and June 28, 2019, ~~and September 28, 2018,~~ respectively.

Other product sales, including IOLs were ~~$5.2~~$4.5 million for the three months ended ~~September 27, 2019,~~July 3, 2020, a decrease of 2%15% from ~~$5.4~~$5.2 million reported for the same period of ~~2018.~~2019. The decrease is due to a decrease in IOL sales, partially offset by an increase in preloaded injector part sales to a third-party manufacturer for product they sell to their customers. Other product sales ~~including IOLs~~ were ~~$15.3~~$10.3 million for the ~~nine~~six months ended ~~September 27, 2019, a decrease~~July 3, 2020, an increase of ~~15%~~3% from ~~$17.9~~$10.0 million reported for the same period of ~~2018.~~2019. The ~~decrease for both periods~~increase is ~~primarily~~ due to ~~the decrease~~an increase in preloaded injector part sales to a third-party manufacturer for product they sell to their customers, ~~and for the three months ended September 27, 2019, partially~~ offset by ~~an increase~~a decrease in IOL sales. Other product sales represented ~~13.4%~~12.7% and ~~16.8%~~13.2% of our total sales for the three months ended ~~September 27,~~July 3, 2020 and June 28, 2019, ~~and September 28, 2018~~respectively,~~, respectively~~ and represented ~~13.7%~~14.7% and ~~19.3%~~13.9% of our total sales for the ~~nine~~six months ended ~~September 27,~~July 3, 2020 and June 28, 2019, ~~and September 28, 2018~~respectively~~, respectively.~~.

	Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change			Three Months Ended						Percentage Change			Six Months Ended						Percentage Change
	September 27, 2019			September 28, 2018			2019 vs. 2018			September 27, 2019			September 28, 2018			2019 vs. 2018			July 3, 2020			June 28, 2019			2020 vs. 2019			July 3, 2020			June 28, 2019			2020 vs. 2019
Gross profit	$	29,051		$	23,860			21.8	%	$	83,130		$	68,518			21.3	%	$	24,430		$	29,899			(18.3	)%	$	49,190		$	54,079			(9.0	)%
Gross margin		74.4	%		75.1	%					74.7	%		73.9	%					69.4	%		75.4	%					69.9	%		74.9	%

Gross profit for the three months ended ~~September 27, 2019~~July 3, 2020 was ~~$29.1~~$24.4 million, ~~a 21.8% increase~~an 18.3% decrease compared to the ~~$23.9~~$29.9 million reported for the same period of ~~2018.~~2019. Gross profit margin decreased to ~~74.4%~~69.4% of revenue for the three months ended ~~September 27, 2019~~July 3, 2020 compared to ~~75.1%~~75.4% of revenue for the three months ended ~~September~~June 28, ~~2018,~~2019, due to geographic sales mix, $1.0 million in expenses related to the COVID-19 manufacturing pause from April 4 through April 27, 2020, period ~~expenses incurred in~~costs associated with the ~~construction~~manufacturing expansion projects, and increased mix of ~~new manufacturing facilities intended to satisfy growing demand for existing products and products currently under review by regulatory agencies. The gross margin impact of~~injector part sales which carry a lower ~~average selling prices was more than offset by the favorable impact of improved product mix.~~margin.

Gross profit for the ~~nine~~six months ended ~~September 27, 2019~~ July 3, 2020 was ~~$83.1~~$49.2 million, a ~~21.3% increase~~9.0% decrease compared to the ~~$68.5~~$54.1 million reported for the same period of ~~2018.~~2019. Gross profit margin ~~increased~~decreased to ~~74.7%~~69.9% of revenue for the ~~nine~~six months ended ~~September 27, 2019~~ July 3, 2020 compared to ~~73.9%~~74.9% of revenue for the ~~nine~~three months ended ~~September~~June 28, ~~2018~~2019,, due primarily to geographic sales mix, $1.2 million in expenses related to the COVID-19 manufacturing pause from March 17 through April 27, 2020, period costs associated with the manufacturing expansion projects and increased ~~sales of ICLs and decreased sales~~mix of injector ~~parts resulting in favorable product mix, partially offset by the effect of~~part sales which carry a lower ~~average selling prices and period expenses incurred in the construction of new manufacturing facilities, as discussed above.~~margin.

	Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change			Three Months Ended						Percentage Change			Six Months Ended						Percentage Change
	September 27, 2019			September 28, 2018			2019 vs. 2018			September 27, 2019			September 28, 2018			2019 vs. 2018			July 3, 2020			June 28, 2019			2020 vs. 2019			July 3, 2020			June 28, 2019			2020 vs. 2019
General and administrative expense	$	7,098		$	6,087			16.6	%	$	21,443		$	18,054			18.8	%	$	7,848		$	7,508			4.5	%	$	15,817		$	14,345			10.3	%
Percentage of sales		18.2	%		19.2	%					19.3	%		19.5	%					22.3	%		18.9	%					22.5	%		19.9	%

General and administrative expenses for the three months ended ~~September 27, 2019~~July 3, 2020 were ~~$7.1~~$7.8 million, ana 4.5% increase ~~of 16.6% when~~ compared ~~with $6.1~~to the $7.5 million reported for the same period of ~~2018.~~2019. General and administrative expenses for the ~~nine~~six months ended ~~September 27, 2019~~July 3, 2020 were ~~$21.4~~$15.8 million, ana 10.3% increase ~~of 18.8% when~~ compared ~~with $18.1~~to the $14.3 million reported for the same period of ~~2018.~~2019. The increase in general and administrative expenses for both periods was due to an increase in headcount and salary-related expenses, ~~including stock-based~~partially offset by a decrease in variable compensation and travel expenses, and for the six months also due to increased ~~facility costs~~tax consulting and ~~professional fees.~~facilities costs.

	Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change			Three Months Ended						Percentage Change			Six Months Ended						Percentage Change
	September 27, 2019			September 28, 2018			2019 vs. 2018			September 27, 2019			September 28, 2018			2019 vs. 2018			July 3, 2020			June 28, 2019			2020 vs. 2019			July 3, 2020			June 28, 2019			2020 vs. 2019
Marketing and selling expense	$	12,463		$	10,620			17.4	%	$	34,288		$	28,733			19.3	%	$	10,326		$	11,682			(11.6	)%	$	21,354		$	21,825			(2.2	)%
Percentage of sales		31.9	%		33.4	%					30.8	%		31.0	%					29.3	%		29.5	%					30.3	%		30.2	%

Marketing and selling expenses for the three months ended ~~September 27, 2019~~July 3, 2020 were ~~$12.5~~$10.3 million, ~~an increase of 17.4% when~~a 11.6% decrease compared ~~with $10.6~~to the $11.7 million reported for the same period of ~~2018.~~ 2019. The decrease in marketing and selling expenses was due to decreased trade show expenses and travel expenses, partially offset by increased advertising and promotional activities.

Marketing and selling expenses for the ~~nine~~six months ended ~~September 27, 2019~~July 3, 2020 were ~~$34.3~~$21.4 million, ~~an increase of 19.3% when~~a 2.2% decrease compared ~~with $28.7~~to the $21.8 million reported for the same period of ~~2018.~~2019. The ~~increase~~decrease in marketing and selling expenses ~~for both periods~~ was due ~~our continued investments in digital, strategic~~to decreased trade show expenses and ~~consumer marketing,~~travel expenses, partially offset by increased advertising, promotional activities and ~~for the nine months ended September 27, 2019, also includes increases in headcount and~~ salary-related ~~expenses including stock-based compensation, and travel~~ expenses.

	Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change			Three Months Ended						Percentage Change			Six Months Ended						Percentage Change
	September 27, 2019			September 28, 2018			2019 vs. 2018			September 27, 2019			September 28, 2018			2019 vs. 2018			July 3, 2020			June 28, 2019			2020 vs. 2019			July 3, 2020			June 28, 2019			2020 vs. 2019
Research and development expense	$	6,156		$	5,570			10.5	%	$	17,889		$	16,323			9.6	%	$	7,311		$	6,098			19.9	%	$	14,209		$	11,733			21.1	%
Percentage of sales		15.8	%		17.5	%					16.1	%		17.6	%					20.8	%		15.4	%					20.2	%		16.3	%

Research and development expenses for the three months ended ~~September 27, 2019~~July 3, 2020 were ~~$6.2~~$7.3 million, ana 19.9% increase ~~of 10.5%~~ compared to ~~$5.6~~the $6.1 million reported for the ~~for~~ same period of ~~2018.~~2019. Research and development expenses for the ~~nine~~six months ended ~~September 27, 2019~~July 3, 2020 were ~~$17.9~~$14.2 million, ana 21.1% increase ~~of 9.6%~~ compared to ~~$16.3~~the $11.7 million reported for the ~~for~~ same period of ~~2018.~~2019. The increase in research and development expenses for ~~the three months ended September 27, 2019~~both periods was primarily due to an increase in expenses related to clinical expenses associated with our EVO clinical trial ~~activities. The increase for~~in the ~~nine months ended September 27, 2019 was mainly due to increases in~~U.S., and increased headcount and salary-related expenses, ~~including stock-based~~partially offset by variable compensation and ~~expenses related to clinical trial activities.~~travel expense.

	Three Months Ended						Percentage Change		Nine Months Ended						Percentage Change		Three Months Ended						Percentage Change			Six Months Ended						Percentage Change
	September 27, 2019			September 28, 2018			2019 vs. 2018		September 27, 2019			September 28, 2018			2019 vs. 2018		July 3, 2020			June 28, 2019			2020 vs. 2019			July 3, 2020			June 28, 2019			2020 vs. 2019
Other income (expense), net	$	(186	)	$	222			—*	$	539		$	(84	)		—*
Other income, net																	$	439		$	434			1.2	%	$	282		$	725			(61.1	)%
Percentage of sales		-0.5	%		0.7	%				0.5	%		-0.1	%				1.2	%		1.1	%					0.4	%		1.0	%

Other ~~expense,~~income, net for the three months ended ~~September 27, 2019~~July 3, 2020 was ~~$0.2~~$0.4 million, comparable to that reported for the same period of 2019. Other income, net for the six months ended July 3, 2020 was $0.3 million compared to other income of ~~$0.2~~$0.7 million reported for the same period of ~~2018.~~2019. The decrease in other ~~expense, net was mainly due to the increase in foreign exchange losses (primarily the euro), offset by an increase in interest income earned on cash and cash equivalents.~~ ~~Other~~ income, net for the ~~nine~~six months ~~ended September 27, 2019 was $0.5 million, an increase from other expense, net of $0.1 million~~ ~~reported for the same period of 2018. The increase in other income, net~~ was due to ~~an increase~~decreases in interest income, ~~earned on cash~~as a result of lower interest rates, and ~~cash equivalents,~~royalty income, which was impacted by COVID-19 pandemic, partially offset by ~~an increase~~a decrease in foreign exchange losses (primarily the euro).

~~The provision for income taxes is determined using an estimated annual effective tax rate.~~ We recorded income taxes of ~~$0.8~~$0.6 million and ~~$2.4~~$1.1 million for the three ~~and nine~~ months ended ~~September 27,~~July 3, 2020 and June 28, 2019, respectively, ~~and $0.3 million and $1.5 million for the three and nine months ended September 28, 2018, respectively. The income tax provision was~~primarily due ~~primarily~~ to pre-tax income generated in certain foreign jurisdictions. Also for the three months ended June 28, 2019 withholding taxes on foreign operations. We recorded an income tax benefit of $0.6 million for the six months ended July 3, 2020 due to the income tax benefit from the release of our U.S. valuation allowances, offset by income tax expense from profits generated by our foreign operations. We recorded income taxes of $1.6 million for the six months ended June 28, 2019 primarily due to pre-tax income generated in certain foreign jurisdictions and withholding taxes on foreign operations. In the fourth quarter of fiscal year 2019, we reversed all previously recorded withholding taxes recorded for 2019, at which time we formed STAAR Surgical UK Limited as a holding company for our foreign operations. Based on the current tax treaties between the U.S., United Kingdom and Switzerland, we will no longer accrue for Switzerland withholding taxes on foreign earnings after fiscal 2018 (see also Note 10 in our fiscal 2019 Form 10-K for more information). We have no unrecognized tax benefits pertaining to any uncertain tax positions as of any period presented.

~~For the three and nine months ended~~ ~~September 27~~, 2019, we included Global Intangible Low Tax Income (“GILTI”) of $4.4 million and $12.1 million, respectively, in U.S. gross income, which was fully offset with net operating loss carryforwards. We were not able to utilize the deduction of 50 percent of GILTI, as this deduction is limited to the Company’s U.S. taxable income.

Due to our history of losses in the U.S., we have maintained a full valuation allowance to offset the value of our U.S. net deferred tax assets on our balance sheet as of September 27, 2019, with the exception of the remaining refundable alternative minimum tax credit of $0.3 million. However, global profit is now includable in U.S. income under GILTI and as a result we have reported income in the U.S. in fiscal year 2018. As our global profitability improves, including our ability to meet or exceed forecasts, we will continue to reassess at each reporting period the need for a full or partial valuation allowance on our U.S. net deferred tax assets. We determine the need forASC 740 requires that a valuation allowance based upon all available positive and negative evidence, including reversals of deferred tax liabilities, projected future taxable income, impact of GILTI in the U.S., tax planning strategies, and results of recent operations. Ifbe established when it is more likely than not that ~~the deferred tax asset is realizable, we would record an income tax benefit for~~ all or a portion of a deferred tax asset may not be realizable. As further described in Notes 1 and 10 of our fiscal 2019 Form 10-K, under the “incremental cash tax savings approach,” we recorded a valuation release of $3.0 million and $0.4 million against federal and certain states deferred tax assets, respectively. During the six months ended July 3, 2020, we revised our global forecasts as a result of COVID-19, and released an additional $1.4 million of valuation allowance. As of July 3, 2020, we released approximately $4.9 million of valuation allowance on our deferred tax assets in the ~~period~~U.S. jurisdiction utilizing the incremental cash tax savings approach. The ultimate realization of deferred tax assets is dependent upon future generation of income during the periods in which ~~such determination is made. Any such changes~~temporary differences representing net future deductible amounts become deductible. We considered the projected future income, tax planning strategies and all other available evidence both positive and negative, as well as results of recent operations in making this assessment. In applying the ~~assessment of~~incremental cash tax savings approach, we will continue to maintain a ~~full or partial~~ valuation allowance ~~could have a material impact~~ on ~~earnings. The valuation allowance was approximately $39.8 million as~~the balance of ~~September 27, 2019.~~the Company’s net U.S. deferred tax assets of $36.5 million.

We believe ~~our~~that current cash, ~~balances coupled with~~ cash ~~flows~~equivalents and future cash flow from operating activities ~~is expected~~will be sufficient to ~~be adequate to cover~~meet our ~~operational~~anticipated cash needs, including working capital needs, capital expenditures and ~~business needs through~~contractual obligations for at least 12 months from the ~~next 12 months.~~issuance date of the financial statements included in this quarterly report. We have experienced some delays in payments on accounts receivable as a result of the COVID-19 pandemic but expect this to improve during the third quarter of 2020 as our customers resume elective refractive surgery. This has had a temporary impact on our working capital. However, at this time we are unaware of any impairment of assets resulting from the COVID19 pandemic. The Company did not apply for or require financing available under the Coronavirus Aid, Relief, and Economic Security “CARES” Act and

does not expect to do so given the strength of our balance sheet. Our financial condition at ~~September 27, 2019~~July 3, 2020 and ~~December 28, 2018~~January 3, 2020 included the following (in millions):

	September 27, 2019		December 28, 2018		2019 vs. 2018		July 3, 2020		January 3, 2020		2020 vs. 2019
Cash and cash equivalents	$	112.3	$	103.9	$	8.4	$	116.3	$	120.0	$	(3.7	)
Current assets	$	165.0	$	151.6	$	13.4	$	182.5	$	174.7	$	7.8
Current liabilities		30.0		27.7		2.3		31.6		34.5		(2.9	)
Working capital	$	135.0	$	123.9	$	11.1	$	150.9	$	140.2	$	10.7

We invest the net proceeds in short-term interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government. Additionally, at ~~September 27, 2019,~~July 3, 2020, we have a line of credit with a Japanese lender, in the amount of ~~$4.6~~$1.3 million, with ~~$2.3~~$3.3 million of availability and a line of credit with a Swiss lender, in the amount of ~~$1.0~~$1.1 million, which is fully available for borrowing.

Net cash ~~provided by~~used in operating activities was ~~$16.0 million and $10.4~~$8.2 million for the ~~nine~~six months ended September 27, 2019 and September 28, 2018, respectively. Net cash provided by operating activities for the nine months ended September 27, 2019, consisted of $13.0 million in non-cash items and $7.7 million in net income, offset by $4.7 million in working-capital changes. The increase inJuly 3, 2020 compared to net cash provided by operating activities of $4.2 million for the six months ended June 28, 2019. Net cash used in operating activities for the six months ended July 3, 2020, consisted of $14.7 million in working-capital changes and a $1.3 million net loss, offset by $7.8 in non-cash items. The change in net cash used in operating activities during the ~~nine~~six months ended ~~September 27, 2019~~July 3, 2020 was due to ~~an increase in net income of $3.8 million and an increase of $3.6 million in non-cash items offset by~~ a decrease in net working capital of ~~$1.8 million.~~$5.0 million, a decrease of $0.8 million in non-cash items and the net loss of $1.3 million during the six months ended July 3, 2020 compared to net income of $5.3 million during the six months ended June 28, 2019.

Net cash used in investing activities was ~~$7.2~~$4.2 million and ~~$1.7~~$4.6 million for the ~~nine~~six months ended ~~September 27,~~July 3, 2020 and June 28, 2019, ~~and September 28, 2018,~~ respectively, and relate primarily to the acquisition of property, plant, and equipment. ~~The increase~~

~~in investment in property, plant and equipment during 2019, relative to 2018, is primarily due to investments in manufacturing facilities intended to satisfy growing demand for our products.~~

Net ~~cash used in financing activities was $0.7 million for the nine months ended September 27, 2019 and net~~ cash provided by financing activities was ~~$75.1~~$8.7 million for the ~~nine~~six months ended ~~September 28, 2018. Net~~July 3, 2020 compared to net cash used in financing activities of $0.6 million for the ~~nine~~six months ended ~~September 27, 2019~~June 28, 2019. Net cash provided by financing activities for the six months ended July 3, 2020 consisted of ~~$1.5~~$9.6 million of proceeds from the exercise of stock options, offset by $0.5 million repayment on the Japan line of credit and ~~$1.0~~$0.3 million repayment of finance lease obligations, offset by $1.8 million of proceeds from the exercise of stock options. During the nine months ended September 28, 2018, we closed an offering of our common stock and received $72.2 million.obligations.

See Notes 7 and 8 of the accompanying Condensed Consolidated Financial Statements.

The Company is in compliance with the covenants of its credit facilities as of ~~September 27, 2019.~~July 3, 2020.

The Company’s Chief Executive Officer entered into an employment agreement with the Company, effective March 1, 2015. She and certain officers have as provisions of their agreements certain rights, including continuance of cash compensation and benefits, upon a “change in control,” which may include an acquisition of substantially all of its assets, or termination “without cause or for good reason” as defined in the employment agreements.

We do not have any off-balance sheet arrangements, as that term is defined in the rules of the SEC, that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

During the ~~nine~~six months ended ~~September 27, 2019,~~July 3, 2020, there have been no material changes in the Company’s qualitative and quantitative market risk since the disclosure in the Company’s Annual Report on Form 10-K for the year ended ~~December 28, 2018.~~January 3, 2020.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of the disclosure controls and procedures of the Company. Based on that evaluation, our CEO and CFO concluded, as of the end of the period covered by this quarterly report on Form 10-Q, that our disclosure controls and procedures were effective. For purposes of this statement, the term “disclosure controls and procedures” means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management, including the CEO and the CFO, do not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud or material errors. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations on all internal control systems, our internal control system can provide only reasonable assurance of achieving its objectives and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of internal control is also based in part upon certain assumptions about the likelihood of future events, and can provide only reasonable, not absolute, assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in circumstances, or the degree of compliance with the policies and procedures may deteriorate.

There were no changes in our internal control over financial reporting during the quarter ended ~~September 27, 2019~~July 3, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of business. These legal proceedings and other matters may relate to, among other things, contractual rights and obligations, employment matters, or claims of product liability. STAAR maintains insurance coverage for various matters, including product liability and certain securities claims. While we do not believe that any of the claims known is likely to have a material adverse effect on our financial condition or results of operations, new claims or unexpected results of existing claims could lead to significant financial harm.

Our short and long-term success is subject to many factors that are beyond our control. Investors and prospective investors should consider carefully information contained in this report and the risks and uncertainties described in “Part I—Item 1A—Risk Factors” of the Company’s Form 10-K for the fiscal year ended ~~December 28, 2018.~~January 3, 2020 and in “Part II—Item 1A—Risk Factors” of the Company’s Form 10-Q for the three months ended April 3, 2020. Such risks and uncertainties could materially adversely affect our business, financial condition or operating results.

~~None.~~Effective May 1, 2020, the Compensation Committee of the Board of Directors, as Administrator of STAAR’s Equity Incentive Plan, approved an amendment to Section 12.5 of STAAR’s Amended and Restated Omnibus Equity Incentive Plan to permit discretionary acceleration of vesting of equity awards granted to a non-employee director in the event of a Termination of Service, as defined by the Plan, after serving a minimum of at least one-half of the relevant term under any Award Agreement, as defined by the Plan.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware	95-3797439
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
25651 Atlantic Ocean Drive Lake Forest, California	92630
(Address of Principal Executive Offices)	(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common	STAA	NASDAQ

		PAGE NUMBER

PART I – FINANCIAL INFORMATION		1

ITEM 1	FINANCIAL STATEMENTS	1

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2019

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2624

ITEM 4.	CONTROLS AND PROCEDURES	2625

PART II – OTHER INFORMATION		2625

ITEM 1.	LEGAL PROCEEDINGS	2625

ITEM 1A.	RISK FACTORS	2625

ITEM 4.	MINE SAFETY DISCLOSURES	2725

ITEM 5.	OTHER INFORMATION	2726

ITEM 6.	EXHIBITS	2726

	Stock Options (in 000’s)			Minimum Exercise Price		Maximum Exercise Price
Outstanding at December 28, 2018		3,920
Granted		818
Exercised		(190	)
Forfeited or expired		(23	)
Outstanding at September 27, 2019		4,525		$	3.50	$	43.84
Exercisable at September 27, 2019		3,104

	Stock Options (in 000’s)			Minimum Exercise Price		Maximum Exercise Price
Outstanding at January 3, 2020		4,326
Granted		609
Exercised		(876	)
Forfeited or expired		(12	)
Outstanding at July 3, 2020		4,047		$	5.05	$	43.84
Exercisable at July 3, 2020		2,717

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

As of September 27, 2019 12 Months Ended	Operating Leases		Finance Leases
September 2020	$	2,920	$	790
September 2021		1,833		426
September 2022		1,082		45
September 2023		867		8
September 2024		319		4
Thereafter		—		—
Total minimum lease payments, including interest	$	7,021	$	1,273
Less amounts representing interest		229		50
Total minimum lease payments	$	6,792	$	1,223

As of December 28, 2018 12 Months Ended	Operating Leases		Finance Leases
December 2019	$	2,606	$	1,153
December 2020		2,202		332
December 2021		980		143
December 2022		507		4
December 2023		202		—
Thereafter		12		—
Total minimum lease payments, including interest		6,509		1,632
Less amounts representing interest		—		75
Total minimum lease payments	$	6,509	$	1,557

3.1	Amended and Restated Certificate of Incorporation.(1)

3.2	Amended and Restated Bylaws.(2)

4.1	Form of Certificate for Common Stock, par value $0.01 per share.(3)

†4.2	Amended and Restated Omnibus Equity Incentive Plan.~~(4)~~*

†10.38	Letter of the Company dated June 30, 2020 to Patrick Williams, Chief Financial Officer, regarding compensation.*

31.1	Certifications Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2	Certifications Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1	Certification Pursuant to 18 U.S.C. Section 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **

101	Financial statements from the quarterly report on Form 10-Q of STAAR Surgical Company for the quarter ended ~~September 27, 2019,~~July 3, 2020 formatted in Inline Extensible Business Reporting Language (iXBRL), are filed herewith and include: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to Condensed Consolidated Financial Statements tagged as blocks of text.*

104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 27, 2019,~~July 3, 2020, has been formatted in Inline XBRL with applicable taxonomy extension information contained in Exhibit 101.

		STAAR SURGICAL COMPANY

Dated:	~~October 30, 2019~~August 5, 2020	By:	/s/ ~~DEBORAH J. ANDREWS~~PATRICK F. WILLIAMS
			~~Deborah J. Andrews~~Patrick F. Williams
			Chief Financial Officer
			(on behalf of the Registrant and as its principal financial officer)